Market Report: Plans for Indian listing spark interest in Cairn

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The Independent Online

The word in the market is that next on the oil exploration and production takeover list will be Cairn Energy, even though its shares dipped 35p to 1,850p yesterday.

The company is in the process of listing its Indian operations, but traders believe it will make a more attractive target once that is complete. Chevron, the US-integrated oil giant, is thought to be running the rule over Cairn, with a view to making an offer once the Indian public offering is out of the way.

Some traders are sceptical about an offer for Cairn. One said: "You can say the same about all of these exploration and production companies. Those with decent assets will always be watched by the majors, but that doesn't mean that investors won't be a long time coming".

Premier Oil lost some of its gains from Monday as a bout of profit taking knocked its shares back 17p to 1,283p. There is still no official word on the identity of the bidder, but some traders believe it is a Kuwaiti national oil group. The broker UBS reiterated its "buy" recommendation on the shares, although with a somewhat bizarre 1,300p price target the Swiss broker also seems to believe there is almost no upside left.

The fund manager Amvescap was 6.5p better by the close at 625p, a four-year high, as investors banked on the company producing strong third-quarter trading figures, due today. Strong global equity markets, good inflows of new money and cost cutting should mean the company reports at least 50 per cent better pre-tax profits in comparison to the same period last year.

Blue-chips spent most of the session in positive territory, but some weakness in commodity and property stocks meant gains were in the low single digits for most of the session. The FTSE 100 closed 16.4 better at 6182.5, mainly thanks to blockbuster numbers from the household goods group Reckitt Benckiser, which finished 124p firmer at 2,324p. The marketing and advertising company WPP Group also found buying support, closing 13.5p better at 683.5p, before Friday's trading update and on repeated chat it may bid for the French rival Publicis.

It was another day to forget for tech investors as Lehman Brothers cut its price target for Wolfson Microelectronics from 600p to 330p, although it did maintain its "overweight" recommendation. ABN Amro also cut its target to 355p from 545p for the microchip group, which warned on revenues last Friday. Wolfson fell 11p to 270p; its rivalCSR lost 17p to 756p. Even strong results from Autonomy could not prevent its shares from joining in the technology bloodbath, as profit taking cost the stock 21p to close at 492p.

Confirmation that Catlin Group has made an approach to rival Wellington Underwriting sent insurance stocks better, with Hiscox climbing 7.5p to 265p and Amlin adding 4.5p to 300.5p. There was a surge of buying in Wellington shares in the run up to the announcement, although some market watchers believed Wellington would be doing the buying. Wellington rose 16.5p to at 113.75p;Catlin added 10.5p to 497.5p.

RDF Media, the television production company behind the Wife Swap, was given a boost as Talpa Beheer, the investment vehicle of Jon de Mol, upped its stake to 19.8 per cent. Shares in RDF climbed 6p to close at 239.5p. Despite the stake increase, traders said a bid is a long shot as Mr de Mol has stakes in a variety of smaller production companies.

LED International, a maker of light-emitting diode technology, made its market debut on Monday. Its shares were placed at 10p and closed at 17.5p yesterday, 4p better on the session and 75 per cent better than the placing price.

Hopes of a bid for the lottery group Chariot have sent its shares higher in the past couple of sessions, giving anyone brave enough to take a punt on the stock on Monday morning an incredible 475 per cent paper return in two days. That said, when shares reach these levels the spread is usually wide enough to mean that even investors who bought at the bottom will have made a fraction of that gain. Traders hope an offer will be made for the company by Astinway after it bought 10 million shares, 14 per cent of the stock, as its shares closed 0.45p better at 1.15p.

Finally, small-cap traders will be on the look-out for Astek Group as it begins trading on AIM today. The dental-equipment supply group raised £1.25m via a private investor placing organised by the broker Hoodless Brennan, priced at 5p, valuing the company at £3.5m. Demand for its shares is likely to be brisk.